Germany is prepared for all Brexit scenarios - Scholz

BERLIN (Reuters) - Germany hopes that Britain will leave the European Union in an orderly manner, but Berlin is also prepared for Britain crashing out of the bloc without a mutually agreed divorce deal, Finance Minister Olaf Scholz was quoted as saying on Friday.

Britain and the EU have agreed a draft text setting out a close post-Brexit relationship, though wrangling with Spain over control of Gibraltar must still be settled before EU leaders meet on Sunday in order to rubber-stamp the pact.

“An unregulated Brexit would be the worst outcome for Europe, but especially for Britain, because it would hit the British economy hard,” Scholz told Passauer Neue Presse newspaper in an interview.

“We are preparing very carefully for both options, the controlled and the uncontrolled Brexit. Both scenarios are posing challenges for us, but we can and will manage them.”

Turning to Italy, the German Finance Minister said not all of Rome’s reform proposals were wrong, such as the introduction of a long-term unemployment security scheme.

But Scholz, a Social Democrat, called on the Italian government to implement its reforms step by step. “If you have so much debt, you have to act with caution and can not implement all projects at the same time,” Scholz said.

“The European Commission’s proposals for Italy are appropriate. It’s consistent to take the next steps now,” Scholz said.

Asked if Italy could cause another euro zone crisis, Scholz said: “No, we are not threatened with a new euro crisis. EU countries have agreed common rules that are important to our currency and to which everyone should abide.”

Italy said on Thursday it would resist pressure from Brussels to revise its big-spending budget, effectively daring EU authorities to punish it with fines ahead of May’s European parliamentary elections.